The Following Information Comes from the Records of Dina Co

question 69

Essay

The following information comes from the records of Dina Co. for the current period.
a. Compute the direct materials price and quantity variances, direct labor rate and efficiency variances and state whether the variance is favorable or unfavorable.
b. Prepare the journal entries to charge direct materials and direct labor costs to goods in process and the materials and labor variances to their proper accounts.
Factory overhead (based on budgeted production of 24,500 units)
Variable overhead $2.25/direct labor hour
Fixed overhead $1.95/direct labor hour

---

Definitions:

Marginal Product

The increase in output that results from employing one more unit of a particular input, keeping all other inputs constant.

Diminishing Marginal Returns

is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, begins to decrease.

Variable Resource

A resource whose quantity can change in the short run to increase or decrease production levels.

Fixed Resource

A resource whose quantity cannot easily be changed in the short term, such as land, buildings, or equipment.